S&P puts Micro Focus on watch

S&P said it placed its BB- long-term issuer credit rating and issue ratings on Micro Focus International plc on CreditWatch with negative implications.

The CreditWatch placement follows Micro Focus' trading update announced on March 19 in which it revised down its revenue guidance for LTM October 2018 to a decline of 6%-9%, from 2%-4% previously. This reflects weaker-than-anticipated revenues from end-October 2017 to date, resulting in an expected 9%-12% revenue decline in the six months to April 2018.

“At this stage, we believe this will result in higher-than-expected S&P Global Ratings-adjusted debt to EBITDA of above 4x for the 12 months to October 2018 versus about 4x previously, as well as FOCF about US$100 million-US$200 million lower, partly due to higher working capital requirements,” S&P said in a news release.

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